European Market Update: Quiet European morning

Friday, March 16, 2012 6:43:26 AM

 TradeTheNews.com European Market Update: Quiet European morning

***Economic Data***
- (RU) Russia Narrow Money Supply (RUB): 6.86T v 6.77T prior
(ES) Spain Q4 Labour Costs Y/Y: 1.6% v 1.5% prior
- (TR) Turkey Feb Consumer Confidence: 93.2 v 92.2 prior
- (IT) Italy Jan Total Trade Balance: -€4.4B v +€1.2B prior; Trade Balance EU: +€756M v -€873M prior
- (PL) Mar Central/Eastern European ZEW Indicator: No est v -19.5 prior
- (IT) Italy Jan Current Account: No est v €402M prior
- (EU) Euro Zone Jan Trade Balance seasonally adj: €5.9B v €6.0Be; Euro-Zone Trade Balance: -€7.6B v -€3.0Be

Fixed Income: - (ZA) South Africa sells total ZAR800M in I/L 2017, 2022 and 2028 Bonds
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- China Vice Commerce Min Chen Jian: Yuan has appreciated "too much" recently
- UK govt said to be planning to cut income taxes for the country's top earners from 50% to 40%
- US Treasury Sec Geithner: There is no quick fix for higher gasoline prices; Reflects uncertain times in the world
- German Chancellor said to proposes Schaueble to head Eurogroup
***Equities*** FTSE 100 +0.40% at 5964, DAX +0.10% at 7150, CAC-40 +0.10% at 3581, FTSE MIB +0.20% at 17,026, IBEX-35 -0.10% at 8416, SMI +0.10% at 6336
- European shares remained in positive territory during the session as economic data continue to be positive. However, auto names were trading lower after Bernstein downgraded the sector.
- Among individual names, Tullow Oil [TLW.UK] rose after announcing that Deepwater Tano licence offshore Ghana, has successfully encountered oil. Air Berlin [AB1.DE] fell after reporting a wider than expected loss due to extraordinary charges as a result of German aviation tax and the increase in fuel prices.
Speakers: - EFSF chief Regling confirmed upcoming EFSF fixed income sales of Bills and bonds
- ECB's Asmussen commented that the first reactions to LTRO were positive and that data suggested that the region has averted a crunch crunch
- ECB's Liikanen commented that the risks to ECB balance sheet were being managed and reiterated that the council did not discuss any interest rate move at its last policy meeting. He stressed that the target2 balance did not act as stand-alone risks. Euro area was still in a crisis that was both long and deep but ECB and governments must separate their responsibilities. The ECB noted that all crisis measures were temporary and govt should use the time now to enact reforms
- Ireland Fin Min Noonan commented that the country's domestic economy could be poised for stronger growth with potential to hit between 4-6% GDP in 2013
- German Fin Min Schaueble said to have cut net new borrowing issuance plans for coming years. Germany now expect net new borrowing of €16B in 2014, of €12B in 2015, and around €4.0B in 2016
- German Fin Min Schaueble declines to comment on speculation that he would replace Juncker as Eurogroup head but added Juncker replacement should be a Euro Zone finance minister
- Russia Central Bank Ulyukayev: Inflation probably bottomed out at 3.7% and sees risk of higher inflation in H2. He added that he did not rule out that RUB currency could appreciate in H2
- India Fin Min Mukherhee presented the FY13 budget speech which began with the notion that the debt crisis in Europe had intensified and affected India. India had to confront near double-digit inflation among an economic slowdown. The minister reiterated that FY12 GDP seen at 6.9% (same as Feb 7th revision) with a current Account deficit at 3.6%. The FY13 forecasted GDP growth at 7.6% and perhaps as high as 7.85% with C/A deficit lower on a year-on-year basis.
- India formally released its FY13 budget which forecasted gross government borrowing at INR5.69T vs. INR5.4Te. Net borrowings were seen at INR4.79T which was also above INR4.5T market expectations. The FY13 budget deficit to GDP was seen at 5.1% vs. 5.9% prior fiscal year with gross tax receipts projected at INR10.8T and non-tax receipts at INR1.65T, The FY13 expenditures were seen at INR14.9T.
- India PM Singh commented after the budget speech that the aim was to reduce fiscal deficit to help tame inflation as a lower fiscal deficit would help reduce crowding out effect of private investment. The challenge for India was to quickening its economic growth pace while cooling inflation
- S&P commented on India's budget and stated that fiscal deficit continued to be too high
And a constraining factor on its sovereign ratings.
- Bank of Spain stated that the country's public debt at end-2011 was at €735.0B while the autonomous region debt at €140.1B. Public debt at end 2011 at 68.5% of GDP (hihest since 1995)
- Turkey Central Bank Gov Basci commented that it was focusing on achieving 2012 CPI target of 5% and GDP growth of 4%, He applauded the central bank's interest rate corridor as a precious policy which helped to recue volatility in TRY currency (Lira)
- Cyprus Fin Min Kazamias said to have resigned due to health concerns; president expected to reshuffle cabinet
- IEA Chief Economist Birol commented that the agency had not receive requests to release emergency oil but was carefully monitoring oil market and prices. He noted that Europe oil, gas import bill was just as serious as the Greek sovereign debt issue. The IEA placed Europe's 2012 oil and gas import bill close to $500B with Turkey's share at $68B
- Poland Central Bank Gov Belka commented that there was no danger of 2012 GDP being below 3%
- New PBoC Advisor: Not realistic to expect large CNY currency appreciation in the near term
Currencies:
- FX markets were quiet during the European morning with little key data releases. The USD consolidated within its recent ranges seen over the last few days. EUR/USD holding below the 1.31 handle while USD/JPY tried to re-approach the 84 handle.
Political/ In the Papers:
- The Bank of Spain reported Spanish public debt at the end of 2011 was at €735.0B, with the debt of the autonomous regions at €140.1B. The public debt at 68.5% of GDP at end of 2011 (Q4) is the highest reading since at least 1995.
- Greek press noted that Greek banks were seeking to delay their FY11 earnings releases.
- The Finance Minister of Cyprus Kazamias was said to have resigned due to health concerns. The president of the country is expected to reshuffle cabinet and announce the changes on Monday, the 19th of March.
- Germany's Chancellor Merkel stated her preference for the Finance Minister Schaeuble for the Eurogroup Chairman role. Chairman Jean-Claude Juncker's term is due to end in June.
- The Irish Times reported that Irish house prices continued to decline. According to research conducted by Davy Stockbrokers, house prices in Ireland indicate no signs of stabilization, and that prices may decline by as much as 70% from peak levels. Reasons for the decline include tight credit conditions, and overall market declines. Additionally, prices have declined by approx 55% from the peak in 2007 against the official figure of 48% released by the Central Statistics Office (CSO).
- The Russia Economic Development Ministry called for a payroll tax cut from 30% to 26%. Last year Russia raised the tax from 26% to 34%.
- The British government, ahead of its budget release next week, is expected to cut income taxes for the country's top earners from 50% to 40%.
***Looking Ahead***
- (US) India weekly Forex Reserves
- 7:00 (IE) Ireland Jan Trade Balance: No est v €3.5B prior
- 7:10 (UK) DMO sells £5.0B in 1-month, 3-month and 6-month Bills
- 7:30 (DE) German Chancellor Merkel holds News Conference With German Industry Associations
- 8:00 (RU) Russia Feb Industrial Production Y/Y: 4.3%e v 3.8% prior
- 8:00 (RU) Russia Feb Producer Prices M/M: +1.0%e v -0.2% prior; Y/Y: 8.0%e v 8.4% prior
- 8:30 (CA) Canada Jan Int'l Securities Transactions: C$9.0Be v C$7.38B prior
- 8:30 (CA) Canada Jan Manufacturing Sales M/M: 0.2%e v 0.6% prior
- 8:30 (US) Feb Consumer Price Index M/M: 0.4%e v 0.2% prior; CPI Ex Food & Energy M/M: 0.2%e v 0.2% prior; CPI NSA: 227.954e v 226.665 prior
- 9:00 (PL) Poland Feb Employment M/M: 0.0%e v 0.9% prior; Y/Y: 0.6%e v 0.9% prior
- 9:00 (PL) Poland Feb Avg Gross Wages M/M: -1.9%e v -8.7% prior; Y/Y: 5.3%e v 8.1% prior
- 9:15 (US) Feb Industrial Production: 0.4%e v 0.0% prior; Capacity Utilization: 78.8%e v 78.5% prior
- 9:55 (US) Mar Preliminary University of Michigan Confidence: 76.0e v 75.3 prior
- 11:00 (MX) Mexico Central Bank Interest Rate Decision: Expected to keep the Overnight Rate unchanged at 4.50%
- 11:00 (US) Fed to sell $8-8.75B in Notes
- 12:00 (PT) Portugal Fin Min Gaspar speaks in Washington DC
- 13;00 (IT) Italy Industrial Min Passera
- 15:00 (US) Fed Evans
Sat 21:30 (CN) China February Property Prices

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